Page 170 - 2023 White Paper on the Business Environment in China
P. 170
3 White Paper on the Business Environment in China
of foreign taxpayers (entity or individual), the SD than 8,000 km of freeways, and establish eight
Law also specifies that the domestic agent in China commercial airports in 2022. Many of the transport
(if any) is the withholding agent, thus obliged to projects were included in China's major projects
withhold/report the relevant SD liabilities on behalf during the 14th Five-Year Plan (2021-25) period.
of the foreign taxpayer(s). In the absence of a The plan released in 2021 said a more convenient
domestic agent, the foreign taxpayer(s) are to self- and high-quality transportation network will
report and settle the corresponding SD liabilities. be built by 2035, allowing most people to have
The SD Law also provides details and/or guidance access to a national highway within 15 minutes, a
on how tax basis should be determined under freeway in half an hour and a railway in an hour.
different circumstances, as well as how “taxpayer” The plan set the goal of building a comprehensive
is determined in situations where a contract transportation network by 2035, when China will
is entered into/executed by multiple parties. basically realize socialist modernization. A more
Taxpayers should reference the noted circulars convenient logistics network will also be built, in
and consult with tax professionals on any issues which parcels will be delivered to customers in
regarding the new SD Law (Vao and Zhou, and EY). China in only one day, to neighboring countries in
two days and reach major cities around the world
New Infrastructure in three days. The network will comprise about
200,000 km of rail tracks, 460,000 km of roads and
China infrastructure investment has historically 25,000 km of waterways, 27 coastal ports and 36
been a key driver of economic growth. In the face inland river ports, about 400 civil aviation airports,
of a slowing economy, the government is now and 80 logistics hubs (Luo).
hoping infrastructure development can continue
to spur growth as it has in the past, despite a Foreign investors in the technology sector have
rapid deceleration in investment growth over the more opportunities to grow in China than ever.
past decade and the dual priorities of increasing The country is gearing up to invite investments
spending and reducing government debt. As the to commercialize technology and bolster private
central government holds tight reins on monetary players to develop more technology innovation. The
and fiscal policy, financing will mainly go to government is also aiming to promote innovation
sustainable infrastructure projects that can help and reinforce its technology sectors by inviting
secure the country’s future, such as digitalization, more foreign investors. This way, the country is
transport, affordable housing, and public trying to counter the impact of the coronavirus
sanitation. Infrastructure spending has had a huge pandemic and re-achieve sustainability in its
role to play in China's meteoric economic rise over infrastructure. Thus, the opportunities for foreign
the past three decades. From laying hundreds and investors are ample. With lower restrictions,
thousands of miles of railway tracks to building foreign direct investments will also increase in the
record-breaking skyscrapers, an eagerness to technology sector. However, the FDI in technology
provide jobs and improve the quality of life for sectors will still be as per the Special Administrative
the population led to a construction boom that Measures for Access to Foreign Investment
has continued to this day. Beijing has historically Negative List, and the Catalogue of Encouraged
leaned heavily on local governments to invest Industries for FDI Encouraged List. Under the new
in infrastructure to shore up growth and ensure China infrastructure plan, foreign companies that
employment in their jurisdictions. The country invest in the encouraged industries will receive
once again turned to infrastructure spending numerous incentives. These include exemption
to stimulate the economy in 2022. The focus of to tariff, lower land prices, lenient real estate use
investment, however, will be much narrower regulations, and reduced corporate income tax.
than in the past, with less rampant investment in Though the number of encouraged industries
speculative and unsustainable projects (Huld). will be increased if the draft is approved, the
industries added to the negative list will no longer
China expected to build more than 3,300 have FDI entry or may have stringent restrictions.
kilometers of railways, build or renovate more Additionally, with the political impact on the
technology industry worldwide, new investors may
170
of foreign taxpayers (entity or individual), the SD than 8,000 km of freeways, and establish eight
Law also specifies that the domestic agent in China commercial airports in 2022. Many of the transport
(if any) is the withholding agent, thus obliged to projects were included in China's major projects
withhold/report the relevant SD liabilities on behalf during the 14th Five-Year Plan (2021-25) period.
of the foreign taxpayer(s). In the absence of a The plan released in 2021 said a more convenient
domestic agent, the foreign taxpayer(s) are to self- and high-quality transportation network will
report and settle the corresponding SD liabilities. be built by 2035, allowing most people to have
The SD Law also provides details and/or guidance access to a national highway within 15 minutes, a
on how tax basis should be determined under freeway in half an hour and a railway in an hour.
different circumstances, as well as how “taxpayer” The plan set the goal of building a comprehensive
is determined in situations where a contract transportation network by 2035, when China will
is entered into/executed by multiple parties. basically realize socialist modernization. A more
Taxpayers should reference the noted circulars convenient logistics network will also be built, in
and consult with tax professionals on any issues which parcels will be delivered to customers in
regarding the new SD Law (Vao and Zhou, and EY). China in only one day, to neighboring countries in
two days and reach major cities around the world
New Infrastructure in three days. The network will comprise about
200,000 km of rail tracks, 460,000 km of roads and
China infrastructure investment has historically 25,000 km of waterways, 27 coastal ports and 36
been a key driver of economic growth. In the face inland river ports, about 400 civil aviation airports,
of a slowing economy, the government is now and 80 logistics hubs (Luo).
hoping infrastructure development can continue
to spur growth as it has in the past, despite a Foreign investors in the technology sector have
rapid deceleration in investment growth over the more opportunities to grow in China than ever.
past decade and the dual priorities of increasing The country is gearing up to invite investments
spending and reducing government debt. As the to commercialize technology and bolster private
central government holds tight reins on monetary players to develop more technology innovation. The
and fiscal policy, financing will mainly go to government is also aiming to promote innovation
sustainable infrastructure projects that can help and reinforce its technology sectors by inviting
secure the country’s future, such as digitalization, more foreign investors. This way, the country is
transport, affordable housing, and public trying to counter the impact of the coronavirus
sanitation. Infrastructure spending has had a huge pandemic and re-achieve sustainability in its
role to play in China's meteoric economic rise over infrastructure. Thus, the opportunities for foreign
the past three decades. From laying hundreds and investors are ample. With lower restrictions,
thousands of miles of railway tracks to building foreign direct investments will also increase in the
record-breaking skyscrapers, an eagerness to technology sector. However, the FDI in technology
provide jobs and improve the quality of life for sectors will still be as per the Special Administrative
the population led to a construction boom that Measures for Access to Foreign Investment
has continued to this day. Beijing has historically Negative List, and the Catalogue of Encouraged
leaned heavily on local governments to invest Industries for FDI Encouraged List. Under the new
in infrastructure to shore up growth and ensure China infrastructure plan, foreign companies that
employment in their jurisdictions. The country invest in the encouraged industries will receive
once again turned to infrastructure spending numerous incentives. These include exemption
to stimulate the economy in 2022. The focus of to tariff, lower land prices, lenient real estate use
investment, however, will be much narrower regulations, and reduced corporate income tax.
than in the past, with less rampant investment in Though the number of encouraged industries
speculative and unsustainable projects (Huld). will be increased if the draft is approved, the
industries added to the negative list will no longer
China expected to build more than 3,300 have FDI entry or may have stringent restrictions.
kilometers of railways, build or renovate more Additionally, with the political impact on the
technology industry worldwide, new investors may
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